State Street marks slight decrease in revenues from FX trading services in Q3 2023
State Street today posted its financial report for the three months to end-September 2023.
Foreign exchange trading services decreased 2% compared to 3Q22, totalling $313 million. The drop was primarily due to lower Direct FX spreads and muted market volatility, partially offset by higher volumes. Foreign exchange trading services increased 3% compared to 2Q23, primarily reflecting higher volumes.
Securities finance decreased 6% compared to 3Q22, primarily due to lower Agency balances and lower specials activity. Securities finance decreased 12% compared to 2Q23, primarily due to lower Agency balances and seasonally lower activity.
Software and processing fees increased 2% compared to 3Q22, primarily driven by higher Front office software and data revenue associated with CRD. Software and processing fees declined 15% compared to 2Q23, driven by lower On-premises renewals associated with CRD.
Servicing fees increased 1% compared to 3Q22, primarily due to higher average equity markets, net new business and the impact of currency translation, partially offset by lower client activity/adjustments and normal pricing headwinds.
Total revenue decreased by 9%, primarily due to a notable item comprising a $294 million loss on sale related to a previously disclosed investment portfolio repositioning, which will benefit Net interest income (NII) in future periods.
Net interest income decreased 5% compared to 3Q22, largely due to lower average deposit balances and deposit mix shift, partially offset by the impact of higher interest rates. Compared to 2Q23, NII decreased 10%, primarily driven by lower average deposit balances and deposit mix shift, partially offset by the impact of higher interest rates, including international central bank hikes, and the investment portfolio repositioning.
Other Income was a loss of $294 million, reflecting a loss on sale related to the investment portfolio repositioning, which will benefit NII in future periods.
Ron O’Hanley, Chairman and Chief Executive Officer, commented:
“In the third quarter, we delivered total fee revenue growth year-over-year, supported by Investment Services, including front office solutions, as well as asset management. We executed on our strategy to refocus our sales efforts within our Investment Services franchise, and generated strong servicing fee revenue wins of $91 million in the quarter, including the first Alpha for Private Markets mandate.”
“In addition, we are pleased with our ongoing transformation and productivity initiatives, which limited our year-over-year expense growth while allowing us to continue investing in our businesses. Further, with the previously announced consolidation of one of our operations joint ventures in India, we expect to generate additional productivity savings in 2024, lower operating costs, and continue to strengthen service quality.”